How B2B Selling Is Changing In China

Nov 20

How B2B Selling Is Changing In China

How to be successful in B2B selling in China? What should you know to optimize your sales and marketing strategy for B2B channel? Here is my take on B2B product selling in China.

First of all, B2B product selling can be classified into 3 main categories:

  1. Selling of raw materials;
  2. Selling of capital equipment;
  3. Selling of machine components;

In general, B2B selling and marketing in China went through some changes in the last few years and still continues to evolve. As everything else in China, the rate of change has been rapid and sweeping. Basically, those changes have been around the decision making process and were driven by the need to increase efficiency.

In the past, the majority of Chinese companies were simply not profit oriented enough or at all. As strange as it may seem, making money and being profitable was not high on those companies’ agenda. How could that be? The truth is that, while making money was not a main priority of many companies, enriching of the top management was. This situation produced decision making that was not in line with company’s interests but based solely on which supplier provides most benefit to a manager making that decision.

The recent credit crunch has put even more pressure on companies to pursue profitability. This has further facilitated changes to decision making process, especially when it comes to which equipment, components or materials to purchase from suppliers.

Of course, a simple name for it would be “corruption” but things were not so black and white back then, they are still aren’t today. Many Chinese still think that it’s a part of new capitalist culture and enriching oneself on company’s account is nothing to be ashamed of.

Fortunately, such views are no longer mainstream today with vast majority of companies becoming truly profit oriented. The recent credit crunch has put even more pressure on companies to pursue profitability. This has further facilitated changes to decision making process, especially when it comes to which equipment, components or materials to purchase from suppliers.

Of course, there are still companies over there who stayed immune to this process, especially SOE (state owned enterprises) and other large corporations with ties to central or provincial governments. Unfortunately, while they are still enjoying unlimited supply of free money and continue to decorate their boardroom with redwood and chandeliers things are unlikely to change for them.

The good news is that the vast majority of companies did evolve and their decision making process adopted accordingly. Nowadays, the process is becoming much more in line with the idea of cost efficiency and looking for the best value. Those suppliers who have based their whole selling and marketing strategy around entertaining their clients and sending them expensive gifts are being squeezed out by more dynamic and value oriented competitors.

At the end of the day, companies in China are now seeking products that provide the best value and those suppliers who can communicate the right points in the clearest and the most efficient ways are consistently coming on top. It doesn’t mean that the era of guanxi is over but the importance of having a product that provides maximum value and the ability to communicate that value are becoming the main factors in determining supplier’s success.

 

 

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